Innovation

Money 2020: The Future of Currency and Payments: Part 1 of 3

I attended the Money 2020 conference in Las Vegas this November. It’s a gathering of over 7,500 financial and technology professionals from over 60 countries. Essentially we all talk about the innovation of money and payments, both of which are undergoing unprecedented disruption. It was the forum’s 4th year but my first and I found it exhilarating and thought provoking.

The conference format is multi-layered. Big room keynote presentations, breakout sessions that are panel discussion style, live demos and an exhibit hall with hundreds of booths. I also found it to be a bit of a homecoming event as I ran into at least a dozen people I previously worked with or worked for me at one time. Nice to see friendly faces again and catch up on what they’re doing.

The breakout sessions are set-up in tracks; regulatory, security, e-commerce, retail banking, etc. My role in the bank is very broad, so I elected to pick and choose across the tracks and ingest a bit from each. The conference doubled in attendee size from last year but it occupied the same space in the Aria Hotel. Needless to say things were very crowded. Some people got shut out of sessions because they arrived on time or a bit late, only to find them already full. Standing room only in many of the sessions I attended.

The content covered a wide range of topics so I don’t claim this post to be a summary of the conference itself. Instead it’s my perspective. What I observed through my lens of “convergence.” I gleaned four distinct themes of content and exploration.

Consumer Research: Who will influence change
Mobile Payments: Who will win?
Crypto Currency: The reinvention of money?
Fraud and Security: Will hacking impede progress?

Consumer Research

Lots of the latest consumer research was unveiled at Money and I carefully planned to attend as many of these sessions as possible. We know the world is big, but thanks to Social Media and the news cycle we tend to lose appreciation for that fact. Check out these insane numbers.

3.6 Billion unique active mobile phone users on Earth! People are saying they’d give up a lot of things in their life before they would give up their mobile device. You’ve see those studies. Indeed the mobile phone has been embedded in our lives and are neurally connected to our finger and hands. It’s happened in the blink of an eye. Steve Jobs released the first iPhone on June 29, 2007. Many think that the phone has materially impacted the way people pay for things, but the following chart reveals that the change began a decade and a half ago and the tectonic plates of payments has been steadily shifting ever since. The phone has not influenced nearly as many people to consider their payment options as debit and credit cards. Plastic still rules. Note: many of these slides were taken with my iPhone from audience seating. I apologize that some are of low fidelity or are not well framed.

As we can see, while checks and cash dominated the transactions of choice for U.S. consumers in 1996, it has been forever overshadowed by credit and debit. Cash is not going away any time soon and if the security of credit and debit cannot be substantially shored-up, the never-ending rounds of retailer database hackings could keep cash and checks on life support for some time to come.

One study asked consumers how they will pay for things in the future. Every one of the presented forms of payment rose except credit, debit and cash. All three showed a decline, with cash leading the way. Certainly it’s very hard to be confident about a survey looking six years out. In the technology innovation mind it’s an eternity. Many disruptive species will be born in that time. But the scale and footprint of payments is vast and when you add in the generational and geographical aspects one cannot be faulted to remain skeptical.

Notice in the chart above that the green line (future) and black line (today) are not that divergent. People say they are expecting to pay in newer ways in greater numbers than now, but those shares are still small. Is this due to the momentum and the buzz around P2P money movement tools as well as the growth of PayPal? Is this how people will prefer to pay in the future?

The chart below puts a future date on the survey questions of 2020. When you look at the numbers by instrument they are not widely different from the above study. What’s interesting is the orange square in the bottom left. An overwhelming number of consumers prefer to use a familiar network provider (Discover, Visa, Master Card, etc.) to provide them with payments choices. Not Square or PayPal, or whatever Silicon Valley garage door opens, but the old guards of payments. Certainly the disrupters definitely have a head start on what attracts consumers. One could say however that it’s the Network’s and Issuer’s battle to lose.

The Emergence of the Millenial

When you wander a conference and keep your ears open you take note of the words or phrases that are repeated in nearly every type of content session as well as what’s said over a libation or two. One of the words that stood out without a doubt at Money was, Millenials. This generation is defined by most as a combination of Generation Y (25-34) and Generation Z (18-24). Seems like a very wide range, but when coupled with exposure to technology and shifting attitudes towards work and education, one can see why they can be coupled.

All camps that I observed lauded the Millenial population as one that brands − old and new − must attract and retain to ensure growth and to maintain relevance (otherwise known as survival). It doesn’t necessarily require a complete reboot, but it does mean we should guard against doing old things new and focus instead on doing new things that accomplish longstanding needs. This will be hard for financial institutions, but the future is all about change in relevance.

Millennials

Our young friends are absolutely adorable. They are confident and have an “I can” attitude. They are book smart and savvy, which means they carry a significant share of the $1 Trillion student loan debt now piled up in the U.S. As such, many live with their parents because they can’t afford a mortgage. An alarming share are under-employed, experiencing a large and confusing cognitive gap between their image of a job while in school and the reality of what they are doing Monday through Friday. This somewhat explains, at least to me, their zealous interest in getting promoted. Dues (literally) have already been paid in the form of tuition and they are looking for a faster track to pay back.

Research I saw at Money outlined an interesting persona of Millennials . They ike to have fun first then hard work next. They are close to their parents, many who have doted on them as children. They buy prestige brands and will spend more to design or customize a product to reflect who they are. As social natives they have more intense relationships with brands and don’t think twice about calling them out for either handing things well or dropping the ball. Their use of Social Media gives them an outsized voice that smart brands are addressing.

What is most fascinating to me is how they leverage technology to positively impact their financial position. We know they are getting their driver’s license later than previous generations, relying on Uber and public transpiration to get to where they want/need to go. Owning a car, actually driving a car is not at all important. They do not define themselves by the cars they drive.

When it comes to consuming content they don’t have a monthly cable bill the size of a car payment. They’re not cord-cutters because they never plugged in the cord. Television ownership is also much lower among Millenials . TV is on a grid. You have to be in the same physical space as a television to watch it. How barbaric! Why do that when you can stream almost anything to the glass surface of your smartphone, tablet or laptop? Oh yes, they don’t own desktop computers either (how mainframe of us). Oftentimes they share Netflix passwords or Prime accounts so everyone can get on the same series. The CBS network recently announced “All Access,” a content streaming service. For $5.99 per month subscribers can watch full seasons of current primetime shows and leading daytime and late night CBS Programming. Others will likely follow.

Another bit of interesting research came from a study on values Millennials rated as important vs. Gen X’ers rating at a similar life stage. Millennials value enjoying life, having fun, authenticity and stable relationships much higher than their Gen X counterparts. They moved freedom, close friends and knowledge down in importance.

Y’s and Z’s were influenced by the internet in their formative years. Gen X is actually more closely aligned with the Boomers in that they were more or less adults before they were faced with the prospects of a digital world. One study drew closer connections between Millennials and Boomers than I would have even imagined. It seems the two categories to be reckoned with, especially among financial services are the Boomers of course (we have all the money) and the Millennials who will eventually have all the money. They will just interact with it in a much different way.

Understanding what your customers value, particularly a segment with this much power is critical to financial success. My next Money 2020 installment will cover Mobile payments and eWallets.

Read Part 2: Mobile Payments and Crypto Currencies

Read Part 3: Tech Crime Takes Off.

Image Credits:

Money 2020 magnifying glass: Money 2020

Crowd at Money 2020: Steve A Furman

Various Slides: Taken during live sessions by Steve A Furman

Image of Several Millennials: Mirus Reporter

“i” is for Jobs, “A” is for Cook, and Other Thoughts about Time

Two days after the big Apple announcement event in Cupertino I’m was just beginning to digest all of the content. One of the things that hit home was subtle, meaningful and very much Apple. Amidst the hundreds of rumors and musings about what would be coming, the iWatch and a wallet of some sort were the headlines.

As it turned out a watch was announced and so was a wallet, but they weren’t iWatch or iWallet. Steve Job’s owns the “i” and it’s sacred territory. The iPod, iPhone, iPad, iMac all these inventions and ways of changing so much belong to Mr. Jobs. Was Apple making a conscious separation from the Jobs era and the Cook era? So we have Apple Payments and the Apple Watch. Mr. Cook and the design team took the iPhone to a new plateau as only they can. Engineering, materials, technology and assembly all combined to give the world the next generation of iPhones.

Then came the Apple Watch announcement.

The Arrow of Time

I fancy myself a watch guy. A serious, but not showy watch collector, as in I own watch winders. Why? Well, the necktie is long gone (thank you), which means men have fewer accessory choices in our wardrobe. Actually that’s not the reason I like timepieces. Mostly it’s likely due to a hardwired XY chromosome thing. I own more than my share of watches. Most of them are very modest in price, but I do have a few gems. Watches are similar to wine. You can get a great one without overspending. But 99.9% of all watches do exactly the same thing. They provide a window into the arrow of time.

Sean Carroll, a senior research associate in the Department of Physics at the California Institute of Technology, studies dark energy and general relativity. He describes the arrow of time.

There’s something called “the arrow of time” and it is simply the direction in which time passes from the past to the future. There are many ways in which the past and future are different: things become messier toward the future; we remember yesterday and not tomorrow; actions we take now affect the future but not the past. All of those reflect the arrow of time.

Now, the origin of the arrow of time is a mystery. Based on the laws of thermodynamics, we understand how it works. But we don’t understand why there is an arrow. It comes down to conditions near the Big Bang; the universe started out highly organized and has been becoming more random and chaotic ever since. The universe is like a mechanical toy that started all wound up, and has been winding down for the last 14 billion years.

Watches don’t keep time, or track time, they simply tell the time. providing the illusion you are in control even when it’s obviously in question. They fix you in the time-space continuum and of course, remind you there’s yet another meeting to attend. According to the arrow of time, things are now more difficult today than they were yesterday. That’s somewhat true I suppose, but the arrow of time does not take into consideration we become smarter over time, even as things become more complex.

There are tens of thousands of watch designs, faces, bands, shapes and sizes. Despite varying features, they are all essentially built to do one simple, singular thing. Display the time.

It’s Time For a Smartwatch Conversation

A classic line from a Mad Men episode, slightly altered, but completely relevant today. The smartwatch began to gain momentum and my attention over the last few years. There are essentially two flavors of them. One is health related. It tracks steps, elevation, etc. and oh yes, it has some kind of timekeeping device inside. The other is a concept watch that tries to combine the utility of a smartphone onto the small but infinitely complex wrist watch.

I got sucked into the Tik Tok and Luna Tick hype. A Kickstarter project that created watch bands for the iPod shuffle. At first glance it was kind of cool, but the more you looked into it or wore it, the more you realized it was wrongheaded in so many ways. I have a smallish wrist and this solution turned out to be larger than I usually wear. But still, I was drawn in by the concept and of course, the potential for exciting convergence.

Next I learned of the Cookoo connected watch. The makers said that “it’s a wearable extension of your smart phone that helps manage your connected life.” Sounded interesting. It was not usable for a watch person like me. I couldn’t read the watch face and couldn’t use it to tell time. A problem? Yes. They only updated their app features once over the eight months I used it off and on. It was not an “extension” of anything and completely “unmanageable.”

Then I got a Pebble watch. Much lighter and more comfortable to wear. It has a lot of watch faces but none of them appealed to me except the Text Watch. I felt like I was wearing a wanna be Smart Watch.

Then I bought a Martian Passport. This one looked like a standard watch with a small window below that displayed texts and @twitter notification to my personal handle. It was the best of the bunch so far. The microphone / speaker integration with Siri worked seamlessly. I got excited about it in the morning. Alas, both these devices were battery hogs and required me to charge much more often than i wanted.

When you look at your watch, which, in the days before smartphones existed, occurred up to 50 times per day, your mind raced back and forward across that arrow of time. Take this test.

If you’re wearing your watch right now, close your eyes and answer these questions. Does the face of your watch have numerals? Are they at all twelve intervals? Are they Roman are Arabic numerals? Are there slashes instead of numerals? Do you have a calendar window? Does it also show the day of the week?

Chances are you can’t answer most of these questions with any confidence despite the fact your watch face never changes and you look at it so many times per day. We have been trained over our entire lives to use a watch in a rote fashion. Raise your wrist or steal a glance under the table to get a marker. Is time running out or dragging? The seconds tick away with consistent precision, but our state of mind swerves from guardrail to guardrail.

The Apple Watch

I predict that the Apple Watch will be the bestselling technology device of 2015. It’s light years beyond anything else that’s been developed and will only add to the genius and essential nature of the iPhone. Will you hand down your Apple Watch to the next generation to be cherished as an heirloom? No. We’ve got those analog models for that. What it will do is start others working on challenging and improving what Apple has done. That’s a very, very good thing.

Pencil 53 – Product Review

Post Updated with writing image February 16, 2014 (Scroll Down)

One of the consistently read posts on my blog is Notability + Bamboo + iPad = Paperless Note Taking. I’m constantly looking for better ways to transfer necessary note taking from paper/pen/pencil to digital. Once we had the rise of the tablet it made sense to use the tablet to collect my thoughts created by our hands. The Bamboo stylus paired with the Notability app on my iPad has served me well and I still use that combination on nearly a daily basis.

Despite that use my search never ends and I recently got a hold of the Paper 53 Pencil. It’s from the makers of the simply amazing Paper App that is the standard for sketching, note taking, diagraming, etc. It was the App of the year in 2012 and deservedly so. I’m not an artist so I didn’t turn to this App very often. Once I discovered the Paper 53 Pencil, that all changed.

The first thing that’s different from other stylus’s is the shape. It’s modeled on the classic carpenter’s pencil that has been in use for decades by tradesmen on the job. The wider, flat surface is easier to hold and can be rotated to make progressively thinner or thicker lines. It’s rugged which is a requirement on an exterior job site and it won’t roll away if you set down on a uneven surface.

I’ve been using my Pencil 53 for about three weeks. It has encouraged me to open up my Paper App more often and begin the process of integrating it into my everyday life. The Pencil 53 and latest Paper App is really smart.

The lower part of the Pencil slides out and plugs into any USB port, charging in about 90 minutes.
Paper claims a full charge will last up to a month. I’ve not had to recharge it during my three weeks of use.
Pairing it with the Paper App is a cinch. Simply tap and hold.
Paper’s toolbar elegantly emerges and you have access to all the various writing, sketching and painting tools through Pencil, which means it’s many tools in one.
The screen knows when it’s the Pencil or your wrist or finger on the screen. It only records friction from the Pencil.
When you make a mistake, and I do all the time, you simply turn the Pencil around and erase it with the tip. No more tapping on an interface to switch to erase mode then back to write/sketch mode.

I opted for the graphite color. The wood Pencil 53 is $10 more. The weight and feel are very satisfying and I’m using it on other Apps like Penultimate and Notability. Very happy. There is one thing you really can’t do with this pencil. Rest it behind your ear. Too large.

Fifty-Three, Inc. packs an extra tip and eraser in the cool tube packaging.

Sample of Pencil 53 and Jot Script on iPad Notability app

SXSW – Storytelling

Austin welcomed the 20th SXSW Interactive event. That’s right twenty years. Despite the fact that digital moves at the speed of light, it has a way of creeping up on us. We’ve become so comfortable with it permeating nearly every corner of our lives we hardly notice when it does.

And so there I was in the midst of digital humanity. It’s kind of like being in a tsunami of content. Tens of thousands of smart (and quite polite) people from all over the world in one place sharing ideas, collaborating and connecting.

The question most asked of me was, “Why did you come here and what do you hope to get back for this large time commitment?” I found myself giving a different answer each time I was asked. Or maybe just identifying another layer of the onion which shaped my personal narrative of benefits. Here’s why I attend SXSW.

Quality session content presented by knowledgable and experienced professionals
Opportunity to see what’s coming next in the expansive exhibit hall
Hear directly from politicians, business leaders, entrepreneurs, inventors, icons and media mavens
Meet new potential vendors, agencies, partners and customers
Conduct business in the context of an innovative atmosphere
Reconnect with people from the past and meet your social friends IRL
Make cool new friends and followers
Network for future opportunities
Come back completely exhausted and fully energized

It’s hard to say exactly who should attend SXSW from your company. It’s not obvious what you are going to get out of it. One has to really spend some time thinking about what you’re seeing and experiencing. It has to be carefully observed, listened to and processed. Only then does your own personal narrative will emerge. My advice is send people who thrive in a crowded environment, are gifted observers, good note takers and have stamina to remain focused on about four hours of sleep a night.

There are hundreds of sessions so one must spend a good chunk of time preparing. Reading the titles gives you a window into what people deem important. The words “story or storytelling” appeared in 112 session titles! Why? My opinion is that we have been inventing, innovating, disrupting and layering so fast that we now need time to step back, take a breath and see if we can recognize what we have made. What does it mean? What do we see? Where do we go next?

Sometimes you can tell what’s going on by noticing what people are not talking about. This year there was a lot less hype around mobile, aside from the mobile focused sessions. The cry of “mobile first” has done its job. Message received. We have apps and mobile web and responsive design. Mobile is an “extension” of almost everything now, Our smartphones are a swiss army knife and that’s the problem. They are maddeningly distracting. Show-rooming gets a lot of notice, but shopping is a flow that is best not interrupted or you have an abandoned cart. We begin to shop and then there’s the call of Twitter or Facebook or Text that takes us off track. Solving this problem is what’s next for mobile. Delivery of relevant content that can garner the same interest as a text from a friend would be awesome. So much of what people are doing now on mobile are either payments or offers related. Of course we love Angry Birds, but it’s time now for mobile to get down to business.

The white space left by the volume on mobile being turned down this year has been filled with stories. I noticed a more than usual amount of personal life content in many of the sessions. They delved into their past, even their childhood, to paint a personal narrative of what motivated them and what fuels their passion.

Here are my notes from the first day, Friday, March 8, 2013

Opening Remarks – Bre Pettis

Bre Pettis is co-founder of MakerBot, a 3-D printer manufacturer. He told his story showing photos of himself as an 8 year old interested in taking things apart and putting them back together. The narrative progressed to the early days of MakerBot and how the team worked almost around the clock to realize their dream. He is deeply passionate about building this printer to help people create and build.

Maker Bot opens the world of creation the way Dreamweaver opened the way to making web sites. — Bre Pettis

He launched thingverse.com in 2008, a web site that has thousands of templates and examples of things you can make with a MakerBot. Their biggest customer is NASA, who uses it to build prototypes, saving them hundreds of thousands of dollars on each project. One of the best stories he shared was a about a the collaboration between two gentlemen who are using the MakerBot to build prototype hands for that will eventually become prosthetics for children who were born with no hands or fingers. He introduced a new product called The Digitizer. A small contraption that uses lasers to scan in an object and upload it directly to the MakerBot, eliminating the need to know CAD software to create the template. They have a store in New York where you can visit and have a likeness of yourself printed for free. Mr. Pettis was humble and inspiring. I want a MakerBot.

Tales of US Entrepreneurship Beyond Silicon Valley – Alexis Ohanian

The Internet wants, needs to be kept as open as possible. As it has grown in influence and usage it was only a matter of time before politics and legislation would leave its mark. Alexis Ohanian, co-founder of Reddit and Internet activist talked about the growing number of entrepreneurs outside Silicon Valley. Small towns using the Internet to start businesses and people connecting online then moving to the physical world to manifest their ideas. He chartered an across the country bus trip and documented these travels in a film. Proof that the Internet of things is the Internet of things. Mr. Ohanian is concerned about the encroachment of regulation on digital assets. He feels that your digital footprint should be protected with the same vigor as all other personal content. Through due process, court orders an search warrants. Not a broad shut down policy or request to get at the information.

Technology, Imagination and Exponential Thinking – Jason Silva

Jason Silva is a futurist, filmmaker and epiphany addict. That’s how he describes himself. I would not disagree, but would add that he is also a 5 hour energy drink. He did not hold still for even a millisecond onstage. You got the feeling that he is a perpetual steeping pot ready to go off any second. His talk spanned just about everything related to the web, human nature, physics, the future. You name it and he talked about it. He was the perfect end of day speaker, raising the energy bar and sending everyone off on a high. I won’t even try to describe what he does. The only way to understand is to watch.

dff

So many of the speakers are approachable and happy to talk along the way. I ran into Jason the following day in one of the lounges and he took the time to connect and engage. Not promote himself, but talk and ask me what I thought. This kind of interaction opportunity is rare. Another benefit of SXSW.

There you have my snapshot of day one! More to come.